In 1995, when Alan Ziobrowski was an associate professor of finance at Lander University, in South Carolina, he found himself at home one night watching “one of those 60 Minutes–type shows.” That evening’s story caught his interest: Gregory Boller, a professor of marketing at the University of Memphis, had found some striking coincidences in which members of Congress, between 1990 and 1995, bought or sold stock in companies that could be affected by ongoing government activity.
According to Boller’s study, which Mother Jones also covered, Senator Lloyd Bentsen (D–Texas) had bought stock in a dairy processor and sold it 10 months later, days before the Justice Department began investigating the company for rigging bids to sell milk in public schools. Senator Bob Dole (R–Kansas) had purchased stock in Automatic Data Processing four days before President George H. W. Bush signed a law with new rules for military data processing. Representative Newt Gingrich (R–Georgia) bought Boeing stock just before he helped kill amendments that would have cut funding for the International Space Station—an outcome that helped Boeing secure a contract.
It all sounded very damning. And yet to Ziobrowski, Boller’s work didn’t seem completely fair. The examples were cherry-picked and could, in fact, have been mere coincidences. How many times, for example, had congressmen sold Lockheed Martin or AT&T right before passing laws that benefited the companies? To know whether members of Congress were turning insider knowledge into personal financial gain, you needed to look at all their trades—those made by the small fry as well as the presidential contenders, the losers as well as the winners. The real question, he thought, was whether a portfolio made up of stocks held by members of Congress would significantly outpace the market.